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Euro Declines As Spanish, Italian Bond Yields Rise On Spain Political Crisis

The euro weakened against most major opponents in European morning trading on Monday, as yields on Spanish and Italian bonds climbed amid political uncertainty in Spain.

While Spain's 10-year benchmark yield advanced 0.11 percentage point to 5.30%, yields on Italian bond was 0.07 percentage point higher at 4.39% as Spanish Prime Minister faces call to resign on charges of secret payments.

The euro also pushed down following a report showed that Spain's unemployment increased from the previous month in January.

Data from the labor ministry showed that the number of unemployed persons in the country increased by 132,055 month-on-month to around 4.98 million in January.

Compared to last year, unemployment increased by 8.28 percent during the month, which was slower than in the previous month.

The annual increase in Eurozone producer prices remained unchanged at 2.1 percent in December, data published by Eurostat showed today. Economists had forecast the rate to edge up to 2.2 percent.

The euro declined to a 4-day low of 1.3574 against the greenback, down from Friday's close of 1.3650. On the downside, 1.35 is seen as the next target level for the euro.

Against the pound, the European single currency reached 0.8637, depreciating 0.62 percent. The next support level for the euro-pound pair is seen at 0.85.

UK construction sector activity declined for a third consecutive month in January amid continuous fall in new order intakes, a survey report from Markit Economics revealed.

The headline Chartered Institute of Purchasing & Supply (CIPS)/Markit purchasing managers' index scored 48.7 in January, unchanged from December's six-month low. Economists expected a higher reading of 49.6.

The euro that pared early gains against the franc fell to 1.2369 and the euro-franc pair is likely to seek next downside target level at 1.23. At last week's close, the pair was worth 1.2391.

The euro hit a 4-day low of 1.3532 against the loonie and the next downside target level for the euro-loonie pair is seen at 1.35. The pair closed last week's deals at 1.3618.

Against the NZ dollar, the euro hit a 6-day low of 1.6062, shedding 0.65 percent from last week's close of 1.6167. The euro may seek next downside target level at 1.60.

The euro slipped against the aussie too, hitting 1.3033. The euro has support level around 1.29. The pair finished Friday's deals at 1.3130.

The total number of building approvals in Australia was down a seasonally adjusted 4.4 percent on month in December, the Australian Bureau of Statistics said on Monday, standing at 12,767.

That was well shy of forecasts for a 1.0 percent increase following the upwardly revised 3.4 percent increase in November (originally reported as 2.9 percent).

At 10:00 am ET, U.S. factory orders data for December is expected.

by RTTNews Staff Writer

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